HRD Environment 1

2 Human Resource Development (Text and Cases)HUMAN RESOURCEDEVELOPMENT

For MBA, PGDBA, MHRM, and Other Management Programmes

Dr. Ram Kumar BalyanB.E., M.B.A., M.P.M., P.G.D.B.A., P.G.D.A.M.,

M.A., L.L.B., D.C.A., M.A.I.M.A., & Ph.D.

Former Director & DeanInstitute of Business Management and Research,

Ahmedabad - 380054.Former Director GIMS, Rajkot, Gujarat.

&President

National HRD Network, Ahmedabad Chapter

Suman BalyanB.Sc. MBA (HR Specialization), Ph.D. (Pursuing)

KSV, University, Gandhinagar, Gujarat.HR Professional & Visiting Faculty.

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA GUWAHATI

DirectorAdvent Institute of Management Studies, Udaipur,

Affiliated to Rajasthan Technical University.

(Text and Cases)

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HRD Environment 3© AUTHORS

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4 Human Resource Development (Text and Cases)

PREFACEEvery organization is established with certain objectives in present and past time. The efforts

are put in different activities to achieve the predecided objectives. The objectives were not difficultto achieve in past due to stable business environment. In last few decades the global business hasundergone drastic changes in social, cultural, legal, political, economy, physical, technological andcompetition areas. Management proposes and situation disposes in achieving the objectives.Organization performs its task with the help of resources as men, machine, materials and money. Allare important in their places. Manpower is a live resource and others are non-living resources. It ismanpower that uses other resources and generates them further. Manpower utilizes other resourcesand gives output. If manpower is not available or in short supply then other resources are underutilizedor are useless and cannot produce as desired. Out of all the factors of production manpower has thehighest priority and ignorance of human resource can prove to be disastrous. The human resource iscritical and difficult to manage. It is because human behaviour is highly unpredictable. It differs notonly from individual to individual but often on the part of some individual at different points of time.In spite of biological and cultural similarities, human beings not only differ in their appearance butalso in their capabilities based on their background, training and experience. Human resource or aperson at work is the most important component of the undertaking. Management cannot afford toignore human resource at any cost. If done so, then management is inviting problems of its own forthe organization.

According to nature of the business of the organization, various activities are performed. Amarketing company would not be involved in production activities but would be involved in tradingactivities, The company involved in backward and forward integrated activities then it would beinvolved in production, marketing, finance, distribution, logistic, human resource and research activities.A large number of activities are performed by employees in such organizations depending upon thenature of the organization. All the different jobs are interrelated to achieve the targets. These are tobe performed by the employees. They are supposed to give their best output so that they cancontribute in achieving overall objectives of the organization. Their performance have great impacton the total production, sales, profit, progress and market shares, customers satisfaction and reputationof the organization in the global markets. Various factors like skills, training, motivation, dedication,welfare, management policies, fringe benefits, salary and packages, promotion, communication etc.,are responsible to encourage the people to work sincerely and give their best output. The importanceof employees’ performance must be understood by the management and sincere efforts must be putin that direction. The management of the company taking timely steps in that direction will be inposition to develop and motivate the people to do so. Finally the company may take the lead in themarket and grab the opportunities available in the market.

Over and above, since last two decades, business environment is undergoing drastic changesand has become very uncertain and risky. It is very difficult to understand and predict about future.It has created a lot of challenges and opportunities for the company. The situation is beyondunderstanding and mistakes are likely to take place. If proper care is not taken then there are

HRD Environment 5

chances for risk and losses to the group. The organization may lose market shares, marketposition and lower profits or suffer losses. Further, the situation has become more critical due to highlevel of competition and rapidly changing technology. Organizations find difficulty in understandingthe situation, nature of jobs, effects of situation and working on new technology. The employeesraise their hand to handle such jobs in critical situation. There is requirement to understand thesituation and handle new machines, and jobs. It has been observed that the existing competencies ofemployees are not in position to deal with the new situation. There is big gap between required andexisting levels of competencies. This situation has given a warning to all organizations to wake up toimprove the existing level of competencies and do the business. It is not possible to do the businessthe way organization wants. A high degree of competency is needed at levels of management andemployees. The need for highly talented and motivated human resource is felt. If the employees arehighly talented and motivated then they would definitely give high level of commitment, performanceand productivity. So the importance of talented and motivated manpower or human resources hasbeen realized by management. They are interested to hire, educate train, motivate and maintain themanpower in such a way that they are in position to achieve the performance standards and objectivesof the organization properly.

In present situation there is question of survival, grow, stabilize, and excel in the businessactivities and that has become difficult. Every business unit is tried to improve the performance ofemployees, products, services to provide high level of satisfaction to the clients and customers. Ithas been realized to perform the tasks better and before others. There is strong drive towardsproductivity improvement across the organization. The organizations with competent, motivated andcommitted employees are in position to meet the objectives in stiff competitive situation. With improvedperformance of employees and organization as a whole the production quantity and quality, profits,customers’ number and satisfaction level, Therefore, the focus of management is more on humanresource. There is change in attitude of management towards the workforce. Now, they are consideredas very valuable assets and partners in the business. Management is interested to develop the skillsof existing manpower to meet the increasing needs of present time. A lot of efforts are needed inthis direction to procure, develop employees and managers and maintain them satisfied at workplace.This is a challenging task. The organization with such manpower can make the show successful.

The major advantages of human resource development activities are to employees, management,organization and society as a whole. Due to this the main advantages are improvement incompetencies, attitude, satisfaction level of employees, management and customers, easy to adjustin organization, level of attachment, commitment, trust, confidence, team spirit, cooperation,productivity, performance, profits, customers base, attracting talented employees in future, and overallreputation of the company. Keeping in view, the increasing importance of human resource developmentfunctions, it inspired us in giving insight into the topics related to human resource developmentrelated concepts to the academicians, practitioners, research scholars and students undergoingmanagement programmes at postgraduation levels mainly. Special care has been taken to researchin emerging trends and rapidly changing business environment. It highly expected that it would be inposition to meet the study related requirements of all concerned.

Authors

6 Human Resource Development (Text and Cases)

DETAILED CONTENTS

Part I: Introduction to HRD

1. HRD Environment 3 – 7Introduction - Questions for Review

2. Human Resource Management 8 – 25Introduction - Definitions of Personnel Management/HRM - Characteristics ofPersonnel Management - Evolution of Personnel Management/HRM - Needfor HRM in India - Scope of HRM - Functions of Personnel Management/HRM- Principles of Personnel Management - Objectives of Personnel Management -HRM and Personnel Management - Qualities of a HRM /Personnel Manager -Conclusion - Questions for Review - Objective Questions

3. Human Resource Development 26 – 63Introduction - Human Resource Development (HRD) - Need for HumanResource Development - Need for HRD in Indian Context - Importance ofHRD - The Evolution of Human Resource Development – Essential Conditionsfor HRD - Trends in HRM/ HRD Functions - Increasing Importance of HRM/HRD Manager - Challenges to HRM/HRD Manager – Approaches to HRD -HRD Mechanism, Processes and Outcomes - Human Resource DevelopmentClimate - Elements of HRD Climate - HRD Climate and Organizational Climate- Factors Contributing to HRD Climate - HRD, Organization Development andIndustrial Relations - Assumptions of IR and HRD/OD - OrganizationDevelopment - Industrial Relations - Relations between HRD–OD–IR - Needfor Collaboration - Development Approach to Industrial Relations - Impact ofLiberalization and Globalization on HRD - Criticism of the New Industrial Policy- Privatization - Criticism of Privatization - Challenges Faced - HRD Strategiesto Deal with Global Competition - Conclusion - Questions for Review - ObjectiveQuestions

4. Planning and Organisation for Human Resource Development 64 – 78Introduction to Planning of HRD System - HRD Policies and Corporate Policy- Organization for Human Resource Development - HRD Responsibility -Functions of HRD/ Personnel Department - Qualities of a Successful HRDManager - Development of Professional Knowledge and Skills in HRD - Issuesand Trends in Structuring of HRD Functions in Indian Industries - Conclusion -Questions for Review - Objective Questions

HRD Environment 7

Part II: HRD Process, Mechanisms and Practices5. Human Resource Development Process 81 – 98

Introduction –Steps involved in HRD Process - Conclusion - Questions forReview - Objective Questions

6. Human Resource Development Mechanisms 99 – 116Introduction - HRD mechanisms - Conclusion - Questions for Review - ObjectiveQuestions

7. Roles and Practices of HRD in Organisations 117 – 134Human Resource Development, Management and Unions - Line Managers rolein HRD - Trade Unions and HRD - HRD in Various Organizations - HumanResource Development in Large Organization - HRD in Small Organization -HRD Activities in Service Sector - Effectiveness of HRD Systems in Organization- Conclusion - Questions for Review - Objective Questions

PART III: HRD Applications8. Role Analysis and Competency in HRD 137 – 148

Introduction - Role Analysis- Elements of Role Analysis- Competency -Competency Mapping - Competency Mapping Process - Guideline forcompetency mapping - Evolution of Competency Mapping - Advantages ofCompetency Mapping – Findings – Suggestions - Conclusion - Questions forReview - Objective Questions

9. Performance Appraisal 149 – 169Introduction - Importance and Uses of Performance Appraisal - Definitions ofPerformance Appraisal - Approaches to Performance Appraisal - Objectives ofPerformance Appraisal - Performance Appraisals as Career Development -Factors Distorting Appraisal - Essential Conditions for Effective Appraisal -Characteristics of a Sound Appraisal Plan - Limitations of Performance Appraisal- Other Issues Related to Performance Appraisal - Conclusion - Questions forReview - Objective Questions

10. Performance Appraisal Process and Methods 170 – 183Performance Appraisal Process - Methods of Performance Appraisal –Conclusion - Questions for Review - Objective Questions

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8 Human Resource Development (Text and Cases)

11. Assessment Centre 184 – 213Introduction - Potential Appraisal - Assessment Centre Meaning - Definitions ofAssessment Centre - Assessment Centre as an Appraisal Method - EssentialElements of an Assessment Centre - Importance of Assessment Centre as aDevelopment Centre - History of Assessment Centre - Designing, Developingand Managing Assessment Centre - Planning for Assessment Centre - JobAnalysis - Communication to Participants - Performance Assessment -Performance Review - Assessors’ Training - Techniques Used in AssessmentCenters - Conclusion - Questions for Review - Objective Questions

12. 360 Degree Performance Appraisal Method 214 – 226Introduction - Meaning of 360 Degree Appraisal Method - Main Appraisers inPerformance Appraisal - Essential Conditions for Effective 360 Degree Appraisal- Advantages of 360 Degree Feedback - Self-appraisal Method - Conclusion -Questions for Review - Objective Questions

13. HRD Audit 227 – 244Introduction - Reasons for HRD Audit - HRD Audit - HRD Process - HRDAudit and Business Development - Methodology of HRD Audit - Limitations ofHRD Audit - HRD Score Card - HRD Audit and OD - Roles of HRD - Conclusion- Questions for Review - Objective Questions

14. Training 245 – 261Introduction - Meaning and Definitions of Training - Training and Development-Need Importance of Training - Objectives of Training - Training Need Assessment- Levels of Training - Principles of Training - Training Methods - Types of Training- Training Process - Designing Programme for Training - Conducting TrainingProgramme - Evaluation of Training Programme - Responsibility for Training –Conclusion - Questions for Review - Objective Questions

15. Management Development 262 – 278Introduction - Management - Development - Management Development (MD)- Definitions of Management Development - Need for Management Development- Management Development Process - Objectives of MD Programme - Methodsof Management Development - Management Education - Environment forManagement Development - Conclusion - Questions for Review - ObjectiveQuestions

16. Career Planning and Development 279 – 308Introduction - Career Definitions - Characteristics of Career - Classification/Types of Career - Career Stages - Career Management - Career Planning -

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HRD Environment 9

Components of Career Planning - Need for Career Planning - Objectives ofCareer Planning - Scope of Organizational Career Planning - Advantages ofCareer Planning - Disadvantages/Limitations of Career Planning - Roles in CareerPlanning and Development - Career Planning and Development Process- Essential Conditions for Effective Career Planning and Development- Conclusion - Questions for Review - Objective Questions

17. Performance Management 309 – 340Introduction - Employee Performance - Advantages of Higher Employees’Performance - Performance Management - Functions of PerformanceManagement - Concerns of Performance Management - Benefits ofPerformance Management - Performance Management and PerformanceAppraisal - Principles of Performance Management Plan - PerformanceManagement Process - Steps in Performance Management Process- Characteristics of Performance Management Process - Roles of Supervisors- Employees and Reviewers - Conclusion - Questions for Review - ObjectiveQuestions

18. Workforce Diversity and Human Resource Development 341 – 369Introduction to Culture Diversity - Role of Culture - Managing Diversity- Managers Role in Diversity Management - Diversity Training - Cross-culturalEducation and Training (CCET) - CCET Process - Types of CC Training- CCET Effectiveness - Relation Between Cross-cultural Programmes andBusiness Results - Diversity Training and Cross-cultural Training - HRDProgramme for Diversified Workforce Socialization through Orientation- Socialization Process - Persons Involved in Socialization Process - Contents ofOrientation Program - Training on Sexual and other Harassments - CareerPlanning and Development Programme - Promotion of Diversity - Conclusion- Questions for Review - Objective Questions

19. Organization Development and Human Resource Development 370 – 415Introduction - Organisation Change - Nature of Change - Levels of Changes- Importance of Change - Resistance to Change - Definitions of OD - Importanceof OD - Essential Conditions for Effective OD - OD Interventions - DesigningIntervention Strategy - Types of OD Interventions - Roles in OD - Position ofOD - Implications for OD Manager - Relationship between HRD and OD- Conclusion - Questions for Review - Objective Questions

20. Knowledge Management and HRD 416 – 429Introduction - Knowledge - Knowledge Management - Factors AffectedKnowledge Management Development - Benefits of K M - Challenges of KM

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1 0 Human Resource Development (Text and Cases)

- HRD - Need for HRD - HRD Climate - HRD Climate and OrganizationalClimate - Knowledge Management and HRD - Findings - Suggestions- Conclusion - Questions for Review - Objective Questions

21. Employees Counselling and Well-being 430 – 456Introduction - Meaning and Definitions of Counselling - Characteristics ofEmployees Counselling - Objectives of Employee Counselling - ProblemsDiscussed in Employee Counselling - Employee Counselling Programme -Essential Conditions for Effective Employee Counselling Programme - Counsellingand Psychological Counselling - Employee Assistance Programmme -Advantages of EAPs - Substance Abuse in the Workplace - Mental HealthProblems - Approach towards Employee Problem Solution - Employee HealthPromotion or Well-being - Conclusion - Questions for Review - ObjectiveQuestions

Part IV: HRD Cases22. Case Study 459 – 477

Performance Management at Tata Steel - 360º Performance Appraisals at Wipro- Assessment Centre - Self-performance Appraisal at IBMR Business School -Team Building and Empowerment for Effective Performance - PerformanceAppraisal - Appraisal as a Technique of Motivation - Promotion of Employees -Promotion Policy - Promotion Adversely Affected Behaviour - Healthy WorkingEnvironment and Higher Performance - Workers Incentives for IncreasingPerformance

23. Bibliography 478 – 486

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HRD Environment 11

Chapter

1 HRD Environment

1. INTRODUCTION

An organization is a human grouping in which the jobs are preformed for attainment of specificobjectives. Every organization has its objectives to be fulfilled. Organizations may be of differenttypes and with different objectives. An organization may be a manufacturing firm, insurance company,a governmental agency, hospital, university and a religious trust. It may be small or large, simple orcomplex, objectives of the organization differ from organization to organization but remain relativelyconstant. These are likely to be modified over a period of time with the changing environment.Organizational goals may be more than one and organization tries to achieve these goals. In order toachieve these goals effectively and efficiently a set of rules and regulations is required. These rulesand regulations will assist its members in accomplishment of the organizational goal. Largeorganizations in public and private sectors are operating their business from different locationsscattered in different parts of the country and performing different types of activities. Theseorganizations are incorporated either by Act of Parliament/Act of Legislature or under CompanyAct, 1956. In the corporate sector for attainment of objectives, variety of functions are performedby utilizing the available resources. We include men, machines, money and materials. These wordsare starting with letter M so these are called 4Ms.

These resources are being used by the management in the organization. Management is the artof getting the work done by others, by utilizing the available resources effectively and efficiently toachieve the predetermined goals of an organization. All the above-mentioned resources are importantfor attainment of objectives. Without these the task cannot be performed. Materials are used formanufacturing and other tasks. Different types of materials like raw materials, semi-finished andfinished goods, inflammables, explosives, electrical and electronic items, gasses, chemicals, fuels,cleaning materials, consumables, etc., are used as per the need of the organizations. Without thesethe required functions cannot be performed. Second, resource is finance. Finance is life blood of thebusiness. It works in business like blood in human body. If blood quality and quantity are not properin our body then many problems are likely to be faced. In shortage of finance the routine, development,payment of workers, payment of bonus, welfare of employees, payment of suppliers, refund of

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1 2 Human Resource Development (Text and Cases)

loans, research and development, replacement of old machines and equipment related activities willbe hampered. It may lead to make the profit making unit a sick unit. It means paise sub kuchh tonahi but bahut kuchh hai. Mr. Duleep Judev, Ex-central minister in government of India duringgovernment of BJP perfectly remarked that paise khuda to nahi per khuda ki kasam khuda sekum bhi nahi. Importance of finance cannot be overlooked. Third, machines or technology playvery important role in accomplishment of tasks of the unit as per planning. Without technology thework is done manually. The speed at which the work is done is slow. The output per worker goesdown and simultaneously the quality also goes down. The costs of production and operation increase.The organization cannot have competitive edge over the competitors using advance technology.With technology the performance increases. The productivity, efficiency and profitability of businessunit increase. So use of technology cannot be ignored at any cost in present time. Out of these,human resource is the most important resource because through the combined efforts of men, otherresources are utilized for accomplishment of the goals. Without human being other resources will beunproductive. Hence, human resource is the most importance resource that is to be managed properly.

Human resource is the most important component of an organization. Human resource hasbeen defined from national point of view, as the total of knowledge, skills, creative abilities, talentsand aptitudes obtained in the population. Whereas from an individual enterprise point of view, theyrepresent the total of inherent abilities, acquired knowledge, skills and aptitudes contained in employeesof the enterprise. The human resource is given increasing significance in modern organization.Obviously, a majority of the problems in organizational setting are human and social rather thanphysical, technical and economic. The failure to recognize this fact causes great loss to the nation,enterprise and the individual. People at work comprise a large number of individuals of different sex,age, education standards and groups. These people at work exhibit not only similar behaviour patternsand characteristics to a certain degree, but they also show many dissimilarities. Each individual whoworks has his own set of needs, drives, goals and experiences. Management, therefore, must beaware not only of the organizational needs but also needs and goals of employees.

The human resources assume importance from an economic standpoint at national, enterpriseand individual levels of analysis. Ginzberg pointed out, human resource is the key to economicdevelopment. However, they are being wasted through unemployment, disguised unemployment,outdated skills, lack of job opportunities, poor personnel policies and practices and problems ofadjusting to changes. There exists a wide scope to increase productivity through their properdevelopment. The physical resources will not give output unless the human resources are applied tothem. However, the human resource also has negative aspects. Over population and poorly trainedworkforce may prove disastrous to the national economy. If the national output does not increasefaster than its population, the standard of living will decline. At enterprise level, there is also anurgent need for effective utilization of the human resource to attain organizational goals. This can bedone by understanding their nature, potentials and limitations of human resource, developing andutilizing it to the optimal ability, maintaining its quality and coordinating it with other resources. Fromindividual point of view, development of employees will get them a source of economic advantage,improves the economic status and living standards.

HRD Environment 13

In a business organization different types of activities are performed as per the nature ofbusiness. All jobs cannot be performed by one person or team. So the jobs are divided and clubbedtogether as per area of specialization. Responsibility to perform tasks is given to a particular personor team and this way the management is divided in different groups and tasks are assigned accordingly.

Management is divided into different branches. The main branches of management are:

(a) Personnel Management/Human Resource Management

(b) Finance Management

(c) Production Management

(d) Material Management

(e) Marketing Management

Each branch of management is made responsible for one department. Hence, personnelmanagement is made responsible to manage human resources. Personnel management has beendefined by EFL Breach as “it is that part of management process which is primarily concerned withthe human constituents of an organization.” Personnel Management is that area of managementwhich has to do with the planning, organizing and controlling various operative activities of procuring,developing, maintaining and utilizing labour force in order that the objectives and interests for whicha company is established are attained as effectively and economically as possible and interests oflabour itself are served to the highest degree. It is concerned with scientific procurement, effectiveutilization, development, motivation and maintaining good industrial relations.

The scope of Personnel Management/HRM would include the following:

Manpower planning, recruitment and selection, training and development, job design,compensation of employees, industrial relations, discipline, promotion, transfer and separation. Theconcept of personnel management developed somewhere at the end of 19th century. The growth ofpersonnel management passed through the stages of needs of better industrial relations, efficiencyand productivity movement, welfare, industrial psychology, human relations and strategic and goal-oriented approach. In the last quarter of the 20th century personnel management was recognized asa profession and concept of Human Resources Management. The two concepts are interchangeableand many organizations are using the concept of personnel management or human resourcemanagement.

Environment affects the function of the organization. Environment means the surrounding oratmosphere in which business activities are performed. There are two sets of factors those affectthe environment. These are internal or controllable factors and external or uncontrollable factors.To carry out the business effectively the organization has to adjust its internal factors in such a waythat the firm can do the business successfully. Business environment is dynamic. Many elements inthe environment undergo changes. These changes are having effect on the health of the business.For that purpose management must have the dynamic policy so that the business operations can be

1 4 Human Resource Development (Text and Cases)

adjusted successfully with changing environment. For example, with the changes in technology, itbecomes necessary for the management to develop the knowledge and skills of employee to operateand maintain the new machines. Policies of personnel management will also undergo changes toadjust the human resources as per need of business. To get best contribution from employees, itbecomes mandatory to develop the available human resources in corporate sector.

Human Resource Development is a subject of national importance, much more of great relevancein a developing and most populous country like India. There is a need to mobilize the human resourcewith the purpose to enable them to participate effectively in the task of nation-building and organizationaldevelopment. Mobilization would include the need to develop resources, their skills, attitudes andaptitudes so that they can competently achieve the pre-determined goals. HRD, thus, constitutes amost complex and challenging problem. Human resource development at micro-level or organizationallevel is a process by which employees of an organization are helped in systematic and continuousway to:

(a) Acquire, sharpen or mould capabilities required to perform various functions relating totheir present and future jobs and rates.

(b) Developing or moulding an organizational culture in which superior-subordinate relationships,teamwork and collaboration among sub-units are strong and contribute to the professionalwell-being, motivation and pride of employees.

(c) Develop and mould their general capabilities and discover and exploit their inner potentialsfor their own and organizational development process.

Human resource development is a function for personnel or human resource management.Unless the human resource is adequately trained and developed up to the required levels of proficiencyand requirement, it cannot be said that they are managed effectively. Human resource developmentmakes possible the effective management of human resource. In other words “Management throughdevelopment” applies correctly to the human resource in any type of organization. In corporatesector, where a large number of business units are operated, manufacturing number of products orproviding services, serving different markets and located in different parts of the country. These aremanaged from the central office or branch offices

With the changing environment, it becomes necessary to update the knowledge and skills ofemployees so that objectives of organization are fulfilled. The function of human resource developmentis performed by personnel or human resource management in the corporate sector. Human resourcedevelopment is a continuous process and a comprehensive system by itself. To perform the functionof human resource development, personnel management performs the activities of job-descriptionand analysis, manpower planning, recruitment and selection, training and development, performanceappraisal, promotion and transfer, employees’ welfare and rewards. By performing the aforesaidactivities Human Resource Management has developed the human resource effectively in multi-national organizations like Hindustan Lever Limited, Suzuki, Honda and Whirlpool could achieve thepredetermined goals effectively and efficiently.

HRD Environment 15

2. QUESTIONS FOR REVIEW

(a) How do you evaluate the present global business environment and discuss the challengesfaced due to this in Indian markets?

(b) Do you feel the human resource is the most important resource in an organization inpresent scenario? Give your Comments.